Civil List

The Prime Minister (Mrs. Margaret Thatcher)

With permission, Mr. Speaker. I should like to make a statement on future arrangements for expenditure on the civil list for the support of [Queen Elizabeth II] Her Majesty the Queen in carrying out her duties as Head of State. I shall also announce some changes on the management of the occupied royal palaces.

The Government propose, with the Queen's agreement and following consultation with the right hon. Gentleman [ Neil Kinnock] the Leader of the Opposition, that Civil List provision should return to the form recommended by the 1971 Select Committee on the Civil List and contained in the Civil List Act 1972. Under those arrangements, the Consolidated Fund made a fixed annual payment related to the anticipated expenditure over a period of years. The Queen's official expenses will thus revert to a standing service on the Consolidated Fund. The need for annual voted supplements under the Civil List Act 1975, introduced as a temporary expedient, will cease.

As the House will know, the financing mechanism in the Civil List Act 1972 supplies, in the early years, provision in excess of need. That surplus will be accumulated as a reserve for use in due course to deal with any future shortfall in income towards the end of the period. If provision is to be adequate to support the Civil List over a decade, the annual payment needs to be set at a realistic level.

Subject to the agreement of the House to the necessary statutory instrument, the Government propose that, from 1 January 1991, the yearly sum for Her Majesty's civil list should be about £7.9 million per year for 10 years, which the Select Committee recommended as the appropriate review period.

The yearly sum is the average of estimated need over the period. It is built up by taking the civil list sum for the present year of £5.09 million—increased by agreed additions for current and capital expenditure—and increasing that sum at 7.5 per cent. per year. That is the average annual rate of inflation over the past decade. The yearly sum also allows for efficiency savings which the Royal Household is expecting to make from continuing improvements in management, in line with the best financial practice.

Should the provision be more than necessary, the surplus at the end of the 10-year period would be carried forward and taken into account by the Government in setting the figure for the new period. Should the proposed provision prove insufficient, there would be a report from the Royal Trustees, and the Government of the day would bring forward proposals for a new settlement. The Civil List Act 1975 and the powers that it contains for additional payments from the Treasury vote will be left in place as a means of financing of last resort.

The same principles have been constructed in adopting a yearly sum for each of the other households that receive annuities under the Civil List Acts. I will, with permission, circulate in the Official Report a note about the Queen's civil list, which will also show the amounts for the other annuitants. The total net cost to the consolidated fund of the other members of the royal family will be about £1.9 million a year after taking account of the amounts that the Queen will continue to refund to cover the payments made to three of the annuitants.
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The Government will present a Royal Trustees report on civil list expenditure later in the year together with a new civil list order-making provision for the new arrangements to come into effect from 1 January 1991. The order is subject to negative resolution.

The Government also propose that the Royal Household should be given greater responsibility for the management of, and expenditure on, the occupied royal palaces. This change is also in keeping with modern financial management. The new arrangements will not disturb the source of finance, so that my right hon. Friend [ Chris Patten] the Secretary of State for the Environment will continue to ask Parliament to vote annually moneys to provide for the necessary maintenance of the occupied royal palaces. Operational responsibility for the upkeep of the palaces within the moneys provided will in future rest with the Royal Household.

The arrangements will be settled under an agreement between the Royal Household and the Department of the Environment. The Comptroller and Auditor General will continue to audit moneys in the hands of the Secretary of State. Expenditure provision will be included as is it now in the civil estimates provided to Parliament. The Government propose that the changes will come into effect on 1 April 1991.

The arrangements that I have announced for the civil list and the occupied royal palaces are, in the view of the Government, in tune with modern financial management. Moreover, they are in keeping with dignity of the Crown and with the esteem and affection in which the royal family are held.

Mr. Neil Kinnock (Islwyn)

I thank the Prime Minister for her statement. May I tell her that there will be widespread support for the decision that the basis of civil list expenditure should be that set out by the 1972 Act, as it obviously serves the purposes of good management? The practical commitments to modernised administration, to the improved efficiency of the Household and to a planned basis for Household expenditure are all welcome.

Can the Prime Minister tell the House what steps have already been taken by the Royal Household to improve efficiency in the use of publicly provided resources? Will she confirm that, because of the assumed efficiency savings to which she referred, the cost to public funds will actually increase by less than 7.5 per cent. in all but one of the years in the 10-year programme?

Finally, will the right hon. Lady accept that the new arrangements under the statute will provide for greater continuity and more effective planning in the financing of the Royal Household and therefore commend themselves to the House?

The Prime Minister

I am grateful to the right hon. Gentleman for his support. He asked what steps had already been taken to improve efficiency. The Household has engaged management consultants to advise it upon these matters. It has had a study made of the use of information technology and, as the right hon. Gentleman knows, some of the extra requirements in the first year will go to providing information technology.

The role of the [the Earl ofAirlie] Lord Chamberlain has been crucial in getting extra good financial management. The appointment of a Director of Property Services will shortly be 301announced so that the Royal Household can the better manage the moneys that are available for the upkeep of the occupied palaces.

As for the right hon. Gentleman's question as to whether the cost will go up by less than 7.5 per cent.—which, he said, happened in every year except the first—the efficiency savings over the period will amount to some £5 million. In the last three years, the increased Civil List expenditure by the Queen has been of the order of 18 per cent. That compares very well with local authorities, whose expenditure in the last three years has been up by 34 per cent.

Mr. Toby Jessel (Twickenham)

Is my right hon. Friend aware that my constituents cherish Hampton Court palace as a royal palace and that they want it to remain a palace, not to become merely a museum? Will my right hon. Friend confirm that it will retain its status as a royal palace?

The Prime Minister

Yes, Hampton Court is one of the unoccupied royal palaces. The arrangements will continue precisely as now for the upkeep of that palace.

Mr. Robert Sheldon (Ashton-under-Lyne)

Since the Royal Household is to be responsible for the expenditure of the greater amount of the moneys concerned, can the Prime Minister say something about the accounting arrangements? She mentioned the responsibilities that would be attached to the National Audit Office, but since the financial arrangements have changed, will a memorandum be published? If there is to be a memorandum, will it be made available to the Public Accounts Committee, if it should wish to see it?

The Prime Minister

The amount spent on the upkeep of the occupied royal palaces will be detailed, as it has been in the past, in the usual Department of the Environment estimates. That sum will be negotiated each year and will be reported in the supplementary estimates. The sum will therefore be subject to audit by the National Audit Office. The civil list will be subject to Treasury audit.

Sir Alan Glyn (Windsor and Maidenhead)

May I join my right hon. Friend in welcoming the new proposals, which give financial continuity to the royal family, who render singular service to the nation? They will also allow the royal family to plan their arrangements in advance. I welcome also the new arrangements for the royal palaces and the very clever and clear study that was undertaken before the proposals were made.

The Prime Minister

I am grateful to my hon. Friend for his support. The new arrangements for the civil list, which revert to the Select Committee proposals in 1971, will give much more dignity and continuity to the Crown and enable its administration to be much more efficient than was previously the case.

Mr. James Molyneaux (Lagan Valley)

May I be permitted to add to the tributes that have been paid to Her Majesty and to the members of the royal family, not least for their frequent visits to Northern Ireland which do so much to stabilise the community in Northern Ireland? My party is, in principle, in favour of reversion to the 10-year period, as laid down in the 1972 Act, but we wonder about the timing. Does not the Prime Minister feel that it will prove somewhat difficult to fix the allowance for inflation some 10 years ahead?

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The Prime Minister

I am grateful to the right hon. Gentleman. We have made no prediction; we have taken the average annual increase in the retail price index, which was 7.5 per cent. in the decade 1979–89. That sounds a lot, but in the previous decade, 1969–79, the average annual rate of inflation was 12.5 per cent. Therefore, we have taken what it was and said that the annual amount will be increased by that figure. If that is too much, there will be a surplus in the fund, which will be taken into account when the Government of the day look at the next 10 years. They will then be able to see what the surplus was.

Mr. Terence L. Higgins (Worthing)

Does my right hon. Friend recall, as I do, that in 1971 the Select Committee spent many months devising a sensible system for this arrangement, and that the reversion to it now is greatly to be welcomed? May I also welcome the improvements in efficiency, which in future will give us even better value for money?

The Prime Minister

I am grateful to my right hon. Friend. In 1971–72, the Select Committee went into the matter more thoroughly than ever before and came up with the good proposal that we are restoring today. The 1975 arrangement was the exception, and now we have reverted to the rule.

Mr. Tony Benn (Chesterfield)

Is the Prime Minister aware that many people believe that the sums paid to the royal family far exceed the services rendered? Can she give us an assurance that, when the order comes before the House, the House will have an opportunity to consider the functions and role of the Crown in modern society, so that people can strike a proper balance on those matters?

The Prime Minister

I think that the right hon. Gentleman will also agree that an overwhelming number of people in the nation regard the royal family as the greatest asset that the United Kingdom has and greatly admire everything that it does. A report of the Royal Trustees will be laid before the House and a new order brought and that order will be subject to negative resolution so that, if the right hon. Gentleman wishes to debate it, he will have an opportunity to do so.

Mr. Patrick Cormack (Staffordshire, South)

Is my right hon. Friend aware that in answering that question she spoke, as always, for more people than the right hon. Member for Chesterfield (Mr. Benn)? But does she agree that, in the commendable and proper search for economy and efficiency, it is important that the royal family do not forget that the British people like pomp and circumstance?

The Prime Minister

The royal family are a great asset and everything must be done in keeping with the role that they play so superbly.

Mr. Dennis Skinner (Bolsover)

Will the Prime Minister confirm that we are talking about a woman who is the wealthiest person in Britain and who does not pay the poll tax? If almost 10 million old-age pensioners can be robbed of the £13.20 that they would have received if the 1979 formula still existed, why should the taxpayer hand out large sums of money to the Queen and all the hangers-on at the palace?

The Prime Minister

I think that most people in Britain will thoroughly disagree with the hon. Gentleman and wish to be totally and utterly dissociated from his words.

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Rev. Ian Paisley (Antrim, North)

Does the right hon. Lady agree that [Queen Elizabeth II] Her Majesty the Queen and the royal family do a service to this country that could not be done as well or as efficiently under any other system of government, and that the nation prefers a monarch and prefers to pay the monarch the proper rate for the job?

The Prime Minister

The deal under the original civil list was a good one for the Treasury, and we must now make proper provision for Her Majesty and the royal family, which I believe has widespread support.

Mr. John Evans (St. Helens, North)

Is the Prime Minister aware that I fully support the principle of the royal family being protected from the ravages of inflation, but can she explain why, in its standard spending assessment last year, St. Helens council was given an allowance of only 4 per cent. for inflation? Surely the people of St. Helens are entitled to the same treatment as the royal family?

The Prime Minister

As I told the Leader of the Opposition, [Queen Elizabeth II] Her Majesty the Queen's civil list expenditure during the past three years has increased by 18 per cent., but during the same period local authorities' expenditure has increased by 34 per cent.

Mr. Ian Gow (Eastbourne)

Since my right hon. Friend formed her first Administration 11 years and more ago, has she not stressed the importance of getting value for public expenditure? Is there any area of the nation's life where value is better secured than the value from the expenditure to which my right hon. Friend has referred in her statement?

The Prime Minister

The value from the expenditure of this money is supreme. It will be much easier for the Royal Household to look after the occupied palaces under the new arrangement than under the old. It will be much better for them to plan for the future with the 10-year arrangement to which we have now reverted.

Mr. Eddie Loyden (Liverpool, Garston)

Does not the Prime Minister agree that it has been the policy of this Government and of previous Governments that, when the state is handing out benefits, they are subject to a means test? Does she not think that, if that is the case, it should be applicable to the civil list?

The Prime Minister

I have set out the new arrangements for the civil list. They will be overwhelmingly welcomed and accepted in the House.

Mr. Julian Brazier (Canterbury)

Does my right hon. Friend agree that, at a time when there are many instabilities and insecurities in different parts of Europe and of the rest of the world, the royal family provide a rock with which the British nation can identify and that those hon. Members who seek to pour scorn on them show how little they care about the tranquillity of this realm?

The Prime Minister

I believe that the royal family are a focus of patriotism, of loyalty, of affection and of esteem. That is a rare combination, and we should value it highly.

Mr. D. N. Campbell-Savours (Workington)

May I press the Prime Minister on the question of any memoranda that Sir Terence Heiser may produce? May we have an assurance that such documentation would go before the Public Accounts Committee?

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The Prime Minister

It will come, as now, in the Department of the Environment estimate in the published supply estimates, and in the same form as it does now, because the property sum for the occupied palaces has to be negotiated each year between the palace and the Department of the Environment. Instead of it going through the Property Services Agency and the Department of the Environment, that sum will go to the palace after agreement, and details will be published, as now, in the supplementary estimate.

Mr. Anthony Beaumont-Dark (Birmingham, Selly Oak)

Does my right hon. Friend accept that most of us think that this is a proper and dignified way in which to deal with the problems of sovereignty and with the way in which the royal palaces are run? There is something terribly undignified about having almost a row each year about how much money is spent on maintaining a superb system of royal government. However, does my right hon. Friend agree that it would be even better if the private wealth and private income of however high a person, even the sovereign, were taxed, as is the case for everyone else? That would seem proper, just and laudable government.

The Prime Minister

No, [Queen Elizabeth II] Her Majesty the Queen has not been subject to tax for a long time. It would require a major change, and that is not a change that I would support.

Dr. Norman A. Godman (Greenock and Port Glasgow)

In light of what the Prime Minister has said this afternoon, has not the time arrived for the House to modify the Crown Estate Act 1961 and, in particular, should we not be arguing the case for a curtailment of the power exercised by the Crown Estate Commissioners, especially in maritime communities and in the management and ownership of the sea bed? Many people in Scotland living in maritime communities, who are loyal subjects of the Queen, actively desire such a change in the power of those shadowy figures in Edinburgh's New Town.

The Prime Minister

If the hon. Gentleman wishes to debate that, I am sure that he will request to do so. It has nothing to do with my announcement this afternoon.

Mr. Ron Brown (Edinburgh, Leith)

We live in a democracy. Is not that the case? Who elected the royal family? I will answer that question for the Prime Minister: no one. Why should they get a penny, bearing in mind that they live in splendour while millions of people live in poverty, thanks to the policies of the Prime Minister and of the ruling class?

The Prime Minister

I will refrain from answering the last point of the hon. Gentleman's question. As he knows, all people of all incomes have increased their standard of living under this Government. I am amazed by what he says in the main part of his question. Most of our actions, whether under the law or as Government, are taken in the name of the Crown.